Lecture 16_Start-ups and spin-outs

Question 1

What is a key advantage and disadvantage of a sole trader?

Answer 1

Advantage: simple and low cost.

Disadvantage: unlimited personal liability

Question 2

What defines a partnership structure?

Answer 2

Two or more people sharing profits and responsibilities, but also sharing liability

Question 3

What is a trust structure used for?

Answer 3

To protect business assets and distribute income to beneficiaries – but it’s complex and expensive to operate

Question 4

What is a Pty Ltd company?

Answer 4

A proprietary limited company with limited liability, a separate legal identity, and a flat tax rate (27.5–30%)

Question 5

How does a Pty Ltd company differ from an LLC in the US?

Answer 5

Both offer limited liability, but taxation and regulation differ: Pty Ltd is taxed as a corporation; LLCs have more flexibility (e.g., pass-through taxation)

Question 6

Name three innovation methodologies used in start-ups.

Answer 6

Design thinking - understanding user needs

Lean Startup - Iteratively validating assumptions and building MVPs

Agile Development - Execution and scale with continuous and rapid redesign/improvement.

Question 7

What is an MVP?

Answer 7

A Minimum Viable Product – a prototype with just enough features to gather user feedback for further development

Question 8

What are the top reasons start-ups fail?

Answer 8

No market need (42%), running out of cash (29%), wrong team (23%), outcompeted (19%), pricing/cost issues (18%)